Microgrids and electricity distribution: reversing the direction of power

Image credit: getty images

By Chris Edwards

Published Monday, May 22, 2017

Microgrids let you declare your independence from the utility companies. The law might not.

It’s more than a century since New York became the first battle zone in the ‘War of Currents’ to determine how electricity is distributed. Today, from the tallest buildings on Brooklyn’s west-facing Park Slope, you can look across the East River to Manhattan’s Lower East Side. There you will see, just to the left of the Brooklyn Bridge and the right of Wall Street, number 257 Pearl Street. It’s now a parking garage. Yet in 1882, it was the first of Thomas Edison’s planned networks of local power plants, distributing low-voltage DC to nearby houses and businesses.

That first plant admittedly didn’t last long; it burned down in 1890 and continued for just a few years after being rebuilt. Yet it took until 2007 for the last of Edison’s DC plants, which supplied power to the elevators of apartment blocks on Manhattan’s 5th Avenue, to be shut down. George Westinghouse’s competing vision of high-voltage AC distribution supplied by massive, centralised power plants had finally captured the whole of New York. But not, it seems, for long.

For those very same rooftops on Brooklyn’s west-facing Park Slope are showing signs that a new front has opened up in the endlessly evolving distribution war. Homeowners here are taking control of electricity generation and distribution as part of a project to build a self-sustaining microgrid: a portion of the electrical network that can operate independently of the utility’s grid.

In April last year Martha Cameron and five of her neighbours linked their solar generators together and started offering spare electricity to other homes using digital transactions based on the same core technology as Bitcoin to handle payments.

Last year at an Environmental and Energy Studies Institute conference in Washington DC, Rob Thornton, president and CEO of the International District Energy Association, said: “Edison had it right. He had smaller generating stations where he sold the heat too. That’s where we are headed, particularly in cities. We are looking at generation at a smaller scale in the cities.”

Thornton says distributed energy helped prevent a total outage after 2012’s Superstorm Sandy in the cities along the eastern seaboard. “The galvanising moment in our industry was Sandy. It affected 21 states. It required an army of utility folks to bring these assets back. The business losses were over $7bn. And it is the fulcrum for why many of us are now talking about microgrids: some systems stood up.”

As the storm hit cities along the US eastern coast, microgrids at locations such as the Federal Drug Administration’s White Oak research centre in Maryland and the Princeton and New York University campuses kept their lights on and provided refuge and recharging points for the emergency services. As soon as the main grid failed, the campus microgrids disconnected – a process known as islanding – relying instead on their own generators.

“If you are a university or healthcare facility you want to > < know when the next Sandy comes that your people, your patients, are safe. When control over power is within your city blocks it’s much easier to deliver resiliency,” Thornton said.

As microgrids move into the community through adoption by hospitals and other large campus owners, they will be able to support consumers around them by exporting energy during grid failures as long as that part of the network can be ‘islanded’ from the main grid.

Ted Borer, energy plant manager at Princeton, says microgrid operators can perform “local triage”. He explains: “The utility can’t see beyond the meter, but the local operator can make the decision on what to keep running. The microgrid might be running a furniture store. During a power cut no-one’s going to be buying furniture so you don’t need to power that. But you can use the energy generated there to keep local critical loads running.”

Although US universities have been keen to create microgrids both as efficiency and research tools, another group saw the potential in microgrids for keeping the lights on early.

Louis Shaffer, manager of Eaton’s distributed energy segment in Europe, the Middle East and Africa, says: “The first type of customer we saw starting around 10 years ago was at military bases. They tend to think in terms of resiliency: what happens if power goes off for more than a few hours, a week or even a month.”

Logistics issues in Afghanistan and Iraq, particularly the need to ship in large quantities of diesel just to keep the electrics running, focused attention on renewables and storage technologies that could easily be deployed in remote bases.

With a lower likelihood of suffering from extreme weather, western Europe is likely to see a different level of microgrid take-up. Although the Centre for Alternative Technology in Wales has operated its own microgrid since 2009, set-ups of the kind found in the US remain rare in Europe and that is likely to be the case for some time.

Ross Bruton, senior industry analyst for smart energy systems at Frost & Sullivan, says: “Western Europe has a very reliable grid. Renewables are being integrated in a way where the main challenge is regulating the resource. So, we see the development of virtual power plants in Europe rather than microgrids because the need to island is as important.”

Such virtual power plants could help increase the ability of renewables to keep the lights on thanks to the falling price of storage in the form of arrays of lithium-ion batteries as well as more exotic technologies. The National Grid 2017 Summer Outlook Report, published at the start of April, claimed the coming months would see the UK unable at times to consume all of the renewable energy available to the network. Yet the network would still need to import energy through interconnectors to the continent and Ireland at night.

Local storage that performs peak shifting can prevent the generated power from being wasted. Projects that utilities cannot connect as suppliers to the grid today because the networks are effectively full – a problem that afflicts Cornwall as much as sunnier locations like Hawaii – are looking at storage to let them avoid pumping out energy during generating peaks. “The utility says if you can manage that we’re fine,” says Shaffer. “If industrial companies can put storage on their own sites and feed power through aggregators, the market for that is very clear. And the utility won’t have to worry about it.”

If local providers can, with both generation and storage, deliver all the electricity needs of an estate or area, they can just as easily unhook themselves from the grid entirely even when there are no outages. If it became a large-scale trend, such grid defections could hammer the revenues of the incumbent utilities because fully islanded grids would no longer expect to pay service and maintenance. The result is a grid that is more expensive to keep running for the remaining users.

Bruton says: “Utilities are realising that the microgrid market is not going away. It’s growing. Grid defection is something that is at the top of their minds.”

In practice, the way in which utilities respond to the threat from microgrids varies widely around the world and even within countries. Today, the US approach to microgrids changes from state to state.

New York utility Con Edison backs the creation of microgrids in Brooklyn and Queens because it sees that as a cheaper option than spending $1bn on a new Long Island substation that it will need if local generation does not cater for local demand, particularly during the city’s frequent heat waves. The utility decided in 2014 that it could save half of that cost by investing $200m in customer-side load management and another $300m in its own more limited upgrades.

New York’s state government is encouraging utilities to embrace distributed generation and microgrids through what it calls the ‘Reforming the Energy Vision’ initiative (REV). The state wants 50 per cent renewable generation by 2030 and, as part of that, has set up a $40m prize fund to communities who want to build their own microgrids. To kickstart more projects the state commission agreed that some projects could get off the ground even if they had fewer than the minimum ten participants.

Thornton says: “The next phase will award 25 to 30 projects nearly a million dollars each. We are seeing communities take control of their energy future. REV is a fund shift in how the electrical utilities work in New York.”

Other states such as Connecticut and Massachusetts and New Jersey are keen to promote microgrid projects. Going independent is not popular among the utilities in other states. Last summer, MGM Resorts International said it had finished installing what it claimed was the largest rooftop solar array on the top of its Mandalay Bay Convention Center. At peak output, the 8.3MW of solar capacity can provide a quarter of the electricity demands of the sprawling Mandalay Bay Resort and Casino that lies alongside the Las Vegas Strip. NRG Energy operates the array for MGM and has replaced the resort’s former provider Nevada Power, a subsidiary of the chief state utility NV Energy. Yet to break away from Nevada Power, MGM has had to pay some $87m in fees and may have to stump up another $80m later this year.

Had MGM taken advantage of a change in the law in 2001 to address problems in the US grid, and before Nevada Power had installed generating capacity to serve the growing population of Las Vegas, the hotel chain might have received money for its defection from the utility.

Across the Atlantic, Spain’s previous government enacted laws that moved from subsidising solar-distributed generation through feed-in tariffs to taxing homeowners for using their own electricity rather than that supplied through the grid. Many could not even receive payment for electricity they provided to the utility. Anyone with less than 100kW of nameplate capacity has to donate their excess. A change in the coalition means the hated ‘Sun Tax’ may be repealed later this year.

Laws intended to provide consumers with competition may provide another obstacle to full grid defection. In Britain, Ofgem’s January 2017 report on the future of the energy network argued homeowners on estates that became self-sufficient in electricity may, without protection, find themselves unable to switch back to the grid: “Where this is an informed choice, that may be acceptable. We should, however, recognise that, for example, subsequent occupiers of the same property may inherit the choice,” the report said.

Going for a microgrid need not mean a break with the utility. Bruton argues: “Ideally you would have utilities investing into microgrids. Most see it as a technological shift that is coming,” Bruton adds. “I think the industry would welcome a hybrid system where the utility can focus on the grid infrastructure and integrate microgrids seamlessly.”

Shaffer notes: “Utilities realised grid defection is a problem if they don’t get out in front of it. The UK has a lot of interesting energy providers and they are moving very fast into these areas.”

Even where utilities are keen to become involved in microgrid operation, there are rules that have built up over the past century that need to be unpicked. Pennsylvania is considered a ‘deregulated’ state in the patchwork of utility regulations across the country but its rules forbid distribution companies from owning storage directly.

“In most European markets storage is identified as a generation asset,” Shaffer says. “That’s because at one time you only had pumped hydroelectric as storage.”

Changes to the rules by organisations such as Ofgem may mean distribution companies cannot own storage arrays but will be able to buy it in as a service and develop virtual power plants and microgrids that cover an industrial estate or parts of a city.

“Making storage its own entity is definitely a first step. The next is having a clear understanding of how these grids interconnect with the grid,” says Bruton.

The changes will take time. But the tide seems to be turning. Edison’s original plan was not so much killed off as delayed.

Princeton goes for jet power

When Princeton University installed its own gas turbine generator just over 20 years ago, a major requirement was for something that could respond quickly to changes in demand. General Electric’s aircraft engine operation had just the thing.

Ted Borer, energy plant manager at Princeton, says: “It’s a jet engine originally developed for the F18 fighter that we strap down to the ground and use to spin a generator.”

The LM1600 ‘aeroderivative’ gas turbine and generator combination is about one-third efficient, says Borer. But the university plant improves on that by capturing the intense heat it generates at the same time. That heat drives heat exchangers used to chill water as well as the piped heating systems.

“We use that cold water to pick up heat from the buildings and cool them off,” says Borer, but it’s not the only application. A giant, half-buried thermal-gradient tank on the campus now stores gallons of chilled water as an energy reserve used to generate electricity when it is most expensive.

“Using thermal energy storage we separate need from production. We buy energy [from the grid] when it is least expensive and deliver when it is more valuable,” Borer says. “We’ve spent 20 years finding ways to invert the power-purchase curves.”

The turbine-driven cogeneration system was the first move to make Princeton more energy independent through a microgrid that incorporates both heating and power to push overall efficiency as high as possible. The university has steadily added solar generation and tied everything together through a software-controlled Economic Dispatch System. This looks at demand and forecasts as well as real-time measurements of the various generators and storage systems.

“We are not just looking at the design numbers we are measuring in real-time. By operating different pieces of equipment at different times we can treat stuff gently so it lasts a long, long time,” Borer says.